Another New Deal? Not Bloody Likely!
Now it begins: America's biggest relief and recovery program since the New Deal. And the omens aren't good.
It's a given that the Bush administration, which tried to turn Iraq into a laboratory for conservative economic policies, will try the same thing on the Gulf Coast. The Heritage Foundation, which has surely been helping Karl Rove develop the administration's recovery plan, has already published a manifesto on post-Katrina policy. It calls for waivers on environmental rules, the elimination of capital gains taxes and the private ownership of public school buildings in the disaster areas. And if any of the people killed by Katrina, most of them poor, had a net worth of more than $1.5 million, Heritage wants to exempt their heirs from the estate tax.
Still, even conservatives admit that deregulation, tax cuts and privatization won't be enough. Recovery will require a lot of federal spending. And aside from the effect on the deficit - we're about to see the spectacle of tax cuts in the face of both a war and a huge reconstruction effort - this raises another question: how can discretionary government spending take place on that scale without creating equally large-scale corruption?
It's possible to spend large sums honestly, as Franklin D. Roosevelt demonstrated in the 1930's. F.D.R. presided over a huge expansion of federal spending, including a lot of discretionary spending by the Works Progress Administration. Yet the image of public relief, widely regarded as corrupt before the New Deal, actually improved markedly.
How did that happen? The answer is that the New Deal made almost a fetish out of policing its own programs against potential corruption. In particular, F.D.R. created a powerful "division of progress investigation" to look into complaints of malfeasance in the W.P.A. That division proved so effective that a later Congressional investigation couldn't find a single serious irregularity it had missed.
This commitment to honest government wasn't a sign of Roosevelt's personal virtue; it reflected a political imperative. F.D.R.'s mission in office was to show that government activism works. To maintain that mission's credibility, he needed to keep his administration's record clean.
But George W. Bush isn't F.D.R. Indeed, in crucial respects he's the anti-F.D.R.
President Bush subscribes to a political philosophy that opposes government activism - that's why he has tried to downsize and privatize programs wherever he can. (He still hopes to privatize Social Security, F.D.R.'s biggest legacy.) So even his policy failures don't bother his strongest supporters: many conservatives view the inept response to Katrina as a vindication of their lack of faith in government, rather than as a reason to reconsider their faith in Mr. Bush.
And to date the Bush administration, which has no stake in showing that good government is possible, has been averse to investigating itself. On the contrary, it has consistently stonewalled corruption investigations and punished its own investigators if they try to do their jobs.
That's why Mr. Bush's promise last night that he will have "a team of inspectors general reviewing all expenditures" rings hollow. Whoever these inspectors general are, they'll be mindful of the fate of Bunnatine Greenhouse, a highly regarded auditor at the Army Corps of Engineers who suddenly got poor performance reviews after she raised questions about Halliburton's contracts in Iraq. She was demoted late last month.
Turning the funds over to state and local governments isn't the answer, either. F.D.R. actually made a point of taking control away from local politicians; then as now, patronage played a big role in local politics.
And our sympathy for the people of Mississippi and Louisiana shouldn't blind us to the realities of their states' political cultures. Last year the newsletter Corporate Crime Reporter ranked the states according to the number of federal public-corruption convictions per capita. Mississippi came in first, and Louisiana came in third.
Is there any way Mr. Bush could ensure an honest recovery program? Yes - he could insulate decisions about reconstruction spending from politics by placing them in the hands of an autonomous agency headed by a political independent, or, if no such person can be found, a Democrat (as a sign of good faith).
He didn't do that last night, and probably won't. There's every reason to believe the reconstruction of the Gulf Coast, like the failed reconstruction of Iraq, will be deeply marred by cronyism and corruption.
(From Paul Krugman, "Not the New Deal," The New York Times, 9/16/05)
It's a given that the Bush administration, which tried to turn Iraq into a laboratory for conservative economic policies, will try the same thing on the Gulf Coast. The Heritage Foundation, which has surely been helping Karl Rove develop the administration's recovery plan, has already published a manifesto on post-Katrina policy. It calls for waivers on environmental rules, the elimination of capital gains taxes and the private ownership of public school buildings in the disaster areas. And if any of the people killed by Katrina, most of them poor, had a net worth of more than $1.5 million, Heritage wants to exempt their heirs from the estate tax.
Still, even conservatives admit that deregulation, tax cuts and privatization won't be enough. Recovery will require a lot of federal spending. And aside from the effect on the deficit - we're about to see the spectacle of tax cuts in the face of both a war and a huge reconstruction effort - this raises another question: how can discretionary government spending take place on that scale without creating equally large-scale corruption?
It's possible to spend large sums honestly, as Franklin D. Roosevelt demonstrated in the 1930's. F.D.R. presided over a huge expansion of federal spending, including a lot of discretionary spending by the Works Progress Administration. Yet the image of public relief, widely regarded as corrupt before the New Deal, actually improved markedly.
How did that happen? The answer is that the New Deal made almost a fetish out of policing its own programs against potential corruption. In particular, F.D.R. created a powerful "division of progress investigation" to look into complaints of malfeasance in the W.P.A. That division proved so effective that a later Congressional investigation couldn't find a single serious irregularity it had missed.
This commitment to honest government wasn't a sign of Roosevelt's personal virtue; it reflected a political imperative. F.D.R.'s mission in office was to show that government activism works. To maintain that mission's credibility, he needed to keep his administration's record clean.
But George W. Bush isn't F.D.R. Indeed, in crucial respects he's the anti-F.D.R.
President Bush subscribes to a political philosophy that opposes government activism - that's why he has tried to downsize and privatize programs wherever he can. (He still hopes to privatize Social Security, F.D.R.'s biggest legacy.) So even his policy failures don't bother his strongest supporters: many conservatives view the inept response to Katrina as a vindication of their lack of faith in government, rather than as a reason to reconsider their faith in Mr. Bush.
And to date the Bush administration, which has no stake in showing that good government is possible, has been averse to investigating itself. On the contrary, it has consistently stonewalled corruption investigations and punished its own investigators if they try to do their jobs.
That's why Mr. Bush's promise last night that he will have "a team of inspectors general reviewing all expenditures" rings hollow. Whoever these inspectors general are, they'll be mindful of the fate of Bunnatine Greenhouse, a highly regarded auditor at the Army Corps of Engineers who suddenly got poor performance reviews after she raised questions about Halliburton's contracts in Iraq. She was demoted late last month.
Turning the funds over to state and local governments isn't the answer, either. F.D.R. actually made a point of taking control away from local politicians; then as now, patronage played a big role in local politics.
And our sympathy for the people of Mississippi and Louisiana shouldn't blind us to the realities of their states' political cultures. Last year the newsletter Corporate Crime Reporter ranked the states according to the number of federal public-corruption convictions per capita. Mississippi came in first, and Louisiana came in third.
Is there any way Mr. Bush could ensure an honest recovery program? Yes - he could insulate decisions about reconstruction spending from politics by placing them in the hands of an autonomous agency headed by a political independent, or, if no such person can be found, a Democrat (as a sign of good faith).
He didn't do that last night, and probably won't. There's every reason to believe the reconstruction of the Gulf Coast, like the failed reconstruction of Iraq, will be deeply marred by cronyism and corruption.
(From Paul Krugman, "Not the New Deal," The New York Times, 9/16/05)
posted by Jim at 12:20 AM
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(From "Mr. Bush in New Orleans," editorial, The New York Times, 9/16/05)
President Bush said three things last night that desperately needed to be said. He forthrightly acknowledged his responsibility for the egregious mishandling of the aftermath of Hurricane Katrina. He spoke clearly and candidly about race and poverty. And finally, he was clear about what would be needed to bring back the Gulf Coast and said the federal government would have to lead and pay for that effort.
Once again, as he did after 9/11, Mr. Bush has responded to disaster with disconcerting uncertainty, then risen to the occasion later. Once again, he has delivered a speech that will reassure many Americans that he understands the enormity of the event and the demands of leadership to come.
But there are plenty of reasons for concern. After 9/11, Mr. Bush responded not only with a stirring speech at the ruins of the World Trade Center and a principled response to the Taliban in Afghanistan. He also decided to invade Iraq, and he tried to do it on the cheap - with disastrous results, for which the country continues to pay every day.
This time, Mr. Bush must come up with a more coherent and well-organized follow-through.
Clearly chastened by the outcry over his slow response to the disaster and his administration's bumbling performance, Mr. Bush said last night that he was prepared to undertake "one of the largest reconstruction efforts the world has ever seen." If he is sincere about his commitment to New Orleans and the other damaged localities, and to the displaced residents, he may have a fight on his hands in persuading Congress to support such an ambitious and necessary effort. Obviously, any official with even a minimal sense of responsibility would understand that this work will have to begin with a promise to give up on any more of the Republican Party's cherished tax cuts.
The speech, as good as it was, marks only a moment of clarity. Mr. Bush's problem in dealing with Katrina has been, at bottom, the same one that has bedeviled the administration since 9/11. The president came to office with a deep antipathy toward big government that has turned out to be utterly inappropriate for the world he inherited. The result has not been less government, but it has definitely been inept government.
We have already seen what happened to the Federal Emergency Management Agency when it was taken over by an administration that didn't like large federal agencies with sweeping mandates. For Iraq, the White House asserted that open-ended and no-bid contracts doled out to big corporations run by people known to government officials would mean swifter, more efficient operations. What we got was gross inefficiency, which has run up costs while failing in many cases to do the jobs required.
Given this history, it's impossible not to worry about what will happen to the billions of dollars being committed to New Orleans, especially since the Army Corps of Engineers' top man in the reclamation effort was once the corps' top man overseeing contracts in Iraq.
The administration is staffed several levels deep with officials who share their leader's distrust of large, expensive federal undertakings. But it is now faced with an unprecedented task: housing hundreds of thousands of homeless people, making sure their children are educated over the short term and eventually getting them a start on a new life. There is no way to do that without a focused federal effort.
Last night, the president was particularly strong when discussing the nation's shocking lack of preparedness for disaster, and the stark fact - obvious to every television viewer around the globe - that the people left homeless and endangered by Katrina were in the main poor and black.
The entire nation, he said, saw the poverty that "has roots in a history of racial discrimination, which cut off generations from the opportunity of America." Polls show that black Americans are far angrier and more skeptical than whites about the administration's actions since the storm. Mr. Bush's words could begin a much-needed healing process. But that will happen only if they are followed by deeds that are as principled, disciplined and ambitious as Mr. Bush's speech.
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